ICICI Prudential offers 'pause' feature in SIPs

First such official offer among mutual funds, sparked by continuing drain of equity folios

Is a tough financial situation not letting you continue your systematic investment plan (SIP) in mutual funds? Then press a 'pause' button for now, legally, to meet your other unavoidable expenses.

Is it possible? Yes, India's third largest fund house, ICICI Prudential MF, has recently brought an 'Pause' feature to investors on all monthly SIPs. It allows a pause in an existing plan for one to three months. The facility can be availed only once during the tenure of the existing SIP but comes with no costs. Investors would not be penalised by their respective banks during the pause duration. Currently, banks through which payments are made, either by or post-dated cheques, charge customers Rs 100 for dishonouring the scheduled payment.

Aashish Somaiyaa, senior vice president & head, retail business, says, “Customers opt for SIP cancellation in tough times, either for personal reasons or to meet other emergencies. In such situations, we run the risk of losing clients. With the SIP Pause, our endeavour is to tell them not to stop but to pause (on) their investments for a temporary period.” Once the pause period is over, the SIP restarts automatically.

For a pause, a physical form needs to be filled and given in at the nearest branch of the fund house.

The initiative comes at a time when the MF sector continues to lose its investor base and cancellations of SIPs are rampant. And, persistently high inflation is squeezing customers' budgets.

Dhruva Chatterji, senior research analyst at Morningstar India, says, “It’s a flexible feature but shows the pressure on the industry to retain customers.” Over the past three years, the fund industry has lost a little over four million retail folios in the equity segment alone.

“Such a feature brings comfort to investors, essentially conveying that instead of stopping investment, pause for some time,” says Ajit Menon, executive vice president, DSP BlackRock MF. For investors’ convenience, the fund house has added a feature which allows investors to redeem through a mobile text message.

‘SIP Pause’ is a new feature for Indian fund houses and barring ICICI MF, none has yet introduced it. However, industry officials say they offer this flexibility to investors. "These are all internal processes and we do try to retain our investors when they approach us after payment failures. Who does not want to keep the client base intact?,” asks the CEO of a mid-sized fund house. According to him, industry does so without officially declaring it. In ICICI’s case, they have made it known.

Currently, if investors fail to honour their payment commitment for three months in a row, the folio is considered cancelled. “But, we cannot keep investors’ wealth. If they want to restart, we do retain our customers,” explains a sales head of another fund house. However, during these non-payment months, banks continue to slap a penalty on the investors.

image
Business Standard
177 22
Business Standard

ICICI Prudential offers 'pause' feature in SIPs

First such official offer among mutual funds, sparked by continuing drain of equity folios

Chandan Kishore Kant  |  Mumbai 



Is a tough financial situation not letting you continue your systematic investment plan (SIP) in mutual funds? Then press a 'pause' button for now, legally, to meet your other unavoidable expenses.

Is it possible? Yes, India's third largest fund house, ICICI Prudential MF, has recently brought an 'Pause' feature to investors on all monthly SIPs. It allows a pause in an existing plan for one to three months. The facility can be availed only once during the tenure of the existing SIP but comes with no costs. Investors would not be penalised by their respective banks during the pause duration. Currently, banks through which payments are made, either by or post-dated cheques, charge customers Rs 100 for dishonouring the scheduled payment.

Aashish Somaiyaa, senior vice president & head, retail business, says, “Customers opt for SIP cancellation in tough times, either for personal reasons or to meet other emergencies. In such situations, we run the risk of losing clients. With the SIP Pause, our endeavour is to tell them not to stop but to pause (on) their investments for a temporary period.” Once the pause period is over, the SIP restarts automatically.

For a pause, a physical form needs to be filled and given in at the nearest branch of the fund house.

The initiative comes at a time when the MF sector continues to lose its investor base and cancellations of SIPs are rampant. And, persistently high inflation is squeezing customers' budgets.

Dhruva Chatterji, senior research analyst at Morningstar India, says, “It’s a flexible feature but shows the pressure on the industry to retain customers.” Over the past three years, the fund industry has lost a little over four million retail folios in the equity segment alone.

“Such a feature brings comfort to investors, essentially conveying that instead of stopping investment, pause for some time,” says Ajit Menon, executive vice president, DSP BlackRock MF. For investors’ convenience, the fund house has added a feature which allows investors to redeem through a mobile text message.

‘SIP Pause’ is a new feature for Indian fund houses and barring ICICI MF, none has yet introduced it. However, industry officials say they offer this flexibility to investors. "These are all internal processes and we do try to retain our investors when they approach us after payment failures. Who does not want to keep the client base intact?,” asks the CEO of a mid-sized fund house. According to him, industry does so without officially declaring it. In ICICI’s case, they have made it known.

Currently, if investors fail to honour their payment commitment for three months in a row, the folio is considered cancelled. “But, we cannot keep investors’ wealth. If they want to restart, we do retain our customers,” explains a sales head of another fund house. However, during these non-payment months, banks continue to slap a penalty on the investors.

RECOMMENDED FOR YOU

ICICI Prudential offers 'pause' feature in SIPs

First such official offer among mutual funds, sparked by continuing drain of equity folios

Is a tough financial situation not letting you continue your systematic investment plan (SIP) in mutual funds? Then press a 'pause' button for now, legally, to meet your other unavoidable expenses.

Is a tough financial situation not letting you continue your systematic investment plan (SIP) in mutual funds? Then press a 'pause' button for now, legally, to meet your other unavoidable expenses.

Is it possible? Yes, India's third largest fund house, ICICI Prudential MF, has recently brought an 'Pause' feature to investors on all monthly SIPs. It allows a pause in an existing plan for one to three months. The facility can be availed only once during the tenure of the existing SIP but comes with no costs. Investors would not be penalised by their respective banks during the pause duration. Currently, banks through which payments are made, either by or post-dated cheques, charge customers Rs 100 for dishonouring the scheduled payment.

Aashish Somaiyaa, senior vice president & head, retail business, says, “Customers opt for SIP cancellation in tough times, either for personal reasons or to meet other emergencies. In such situations, we run the risk of losing clients. With the SIP Pause, our endeavour is to tell them not to stop but to pause (on) their investments for a temporary period.” Once the pause period is over, the SIP restarts automatically.

For a pause, a physical form needs to be filled and given in at the nearest branch of the fund house.

The initiative comes at a time when the MF sector continues to lose its investor base and cancellations of SIPs are rampant. And, persistently high inflation is squeezing customers' budgets.

Dhruva Chatterji, senior research analyst at Morningstar India, says, “It’s a flexible feature but shows the pressure on the industry to retain customers.” Over the past three years, the fund industry has lost a little over four million retail folios in the equity segment alone.

“Such a feature brings comfort to investors, essentially conveying that instead of stopping investment, pause for some time,” says Ajit Menon, executive vice president, DSP BlackRock MF. For investors’ convenience, the fund house has added a feature which allows investors to redeem through a mobile text message.

‘SIP Pause’ is a new feature for Indian fund houses and barring ICICI MF, none has yet introduced it. However, industry officials say they offer this flexibility to investors. "These are all internal processes and we do try to retain our investors when they approach us after payment failures. Who does not want to keep the client base intact?,” asks the CEO of a mid-sized fund house. According to him, industry does so without officially declaring it. In ICICI’s case, they have made it known.

Currently, if investors fail to honour their payment commitment for three months in a row, the folio is considered cancelled. “But, we cannot keep investors’ wealth. If they want to restart, we do retain our customers,” explains a sales head of another fund house. However, during these non-payment months, banks continue to slap a penalty on the investors.

image
Business Standard
177 22

LIVE MARKET

BSE

  ( %)

NSE

  ( %)

More News

STOCK WATCH

Company Price() Chg(%)
Jindal Steel 80.35 14.79
Bajaj Fin. 9853.40 9.75
Amtek Auto 51.60 7.50
DCM Shriram 230.65 6.68
JP Power Ven. 6.57 6.14
> More on BSE Gainers
Company Price() Chg(%)
Jindal Steel 80.35 14.70
Bajaj Fin. 9848.35 9.63
Amtek Auto 51.60 7.50
DCM Shriram 230.55 7.16
Aditya Bir. Fas. 148.60 6.14
> More on NSE Gainers
Company Price() Chg(%)
Caplin Point Lab 1110.35 -8.60
Unitech 7.02 -8.47
Welspun India 100.50 -7.29
Navin Fluo.Intl. 2287.75 -7.28
GHCL 210.10 -6.75
> More on BSE Gainers
Company Price() Chg(%)
Caplin Point Lab 1109.95 -9.33
Unitech 7.00 -8.50
Welspun India 100.10 -7.36
Firstsour.Solu. 49.25 -6.81
Karur Vysya Bank 481.55 -5.39
> More on NSE Gainers
Widgets Magazine
Widgets Magazine
Widgets Magazine

Derivatives

Index
Instrument Type
Expiry Date
Option Type
Strike Price

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard